Tokyo Electric Power Co. should cut salaries by at least 30 percent instead of 20 percent for regular employees and 25 percent for management before trying to push an electricity rate hike on households, a Consumer Affairs Agency panel said Tuesday.
In compiling its final opinions on Tepco’s planned rate hike for households, the panel also said the utility should not reflect the annual ¥48.7 billion cost to contain the disaster at the Fukushima No. 1 nuclear plant, including the processing of radioactive water, in the fees to be passed onto consumers because it has failed to provide a clear explanation of why this is necessary.
“Utilities can recover the costs of generating and distributing power as long as they are appropriately managed. The costs derived from the (Fukushima) accident, which was caused by improper management, should not be included,” said a statement released by the panel, which mainly consists of representatives from consumer-related groups.
Tepco initially applied to industry minister Yukio Edano on May 11 to raise household electricity rates by an average 10.28 percent, based on an estimate that total costs will average ¥5.72 trillion per year during the three years from fiscal 2012.
Besides the consumer panel’s recommendations, those compiled by a Ministry of Economy, Trade and Industry panel also called for the household rate hike to be lowered by around 1 percentage point. Media reports meanwhile said Tepco probably would be lucky to pull off even an 8 percent rate hike.
Following the final meeting of the consumer panel Tuesday, Jin Matsubara, state minister in charge of consumer affairs, conveyed the panel’s opinion to METI chief Edano later in the day.
METI directly oversees the power industry and handles any rate-hike requests from utilities. But given the impact of a rate increase on consumers and the public’s distrust of Tepco and METI, the Consumer Affairs Agency has been keeping close tabs on how the ministry examines Tepco’s request.
“We always discussed this issue from the consumers’ standpoint” to reflect their voices in the process, Matsubara told reporters.
He noted it is still unclear when the government will make a final decision on the request by Tepco, which had hoped to raise rates this month.
During the meeting Tuesday, members of the consumer affairs panel said they were glad the agency played an important role in the scrutinizing, because the METI panel appears to be soft on the utility.
The METI panel said Tepco’s 20 percent and 25 percent salary cuts were appropriate, but the consumer affairs panel said the utility should reduce pay by 30 percent.
The METI panel also said Tepco should be allowed to pass on the costs of containing the Fukushima No. 1 crisis, arguing it is crucial that the utility keep the situation under control.
But the consumer affairs panel noted companies in general do not, or should not be allowed to, increase prices of their products to cover losses caused by improper management.